Companies ( Accounts) Amendment Rules 2021 and Changes in Schedule-III (Preparation of Financial Statements) of the Companies Act, 2013
March 26, 2021
News from the desk of Ministry of Corporate Affairs (MCA)
1- Companies (Accounts) Amendment Rules, 2021
MCA vide its notification dated 24th March, 2021 has amended the existing Companies (Accounts) Rules, 2014 and has notified Companies (Accounts) Amendment Rules, 2021. The amended rules provides as under:
- Mandatory use of accounting software with feature of audit trail : With effect from the financial year commencing on or after the 01st day of April, 2021, every Company is now under an obligation to use only such accounting software which has below features:
- a feature of recording audit trail of each and every transaction;
- creating an edit log of each change made in books of account along with the date when such changes were made; and
- ensuring that the audit trail cannot be disabled.
- Other matters to be part of the Board’s Report: Every Company shall include below additional matters as a part of the Board’s Report:
- the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year along with their status as at the end of the financial year.
- the details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons.
The above said rules would come into force with effect from the 1st day of April, 2021.
The complete text of the notification may be viewed at below link:
2. Changes in Schedule III (Preparation of Financial Statements) of the Companies Act, 2013
MCA vide its notification dated 24th March, 2021 has amended the Schedule III of the Companies Act, 2013. The amended Schedule III requires following key disclosures to be included in the Financial Statements:
- Disclosure of shareholding of Promoters;
- Ageing schedule for trade Payable for period less than 1 year, 1-2 years, 2-3 years and more than 3 years;
- Ageing schedule for trade receivable for period less than 6 months , 6 months-1 year, 1-2 years, 2-3 years and more than 3 years;
- Ageing schedule for Capital work in progress (CWIP) for period less than 1 year, 1-2 years, 2-3 years and more than 3 years.
- Ageing schedule for Intangible assets under development for period less than 1 year, 1-2 years, 2-3 years and more than 3 years.
- A reconciliation of the gross and net carrying amounts of each class of assets at the beginning and end of the reporting period showing additions, disposals, acquisitions;
- Details of all the immovable property other than the properties wherein the Company is not a lessee;
- In case of revaluation of the Property, Plant and Equipment of the Company, disclosure as to whether the Property, Plant and Equipment of the Company are valued by a registered valuer;
- Loan and advances granted to promoters, directors, KMPs and the related parties;
- Details of Benami Property held in the name of the Company;
- In case the Company borrows from banks or financial institutions on the basis of security of current assets, Disclosure relating to whether quarterly returns or statements of current assets with the books of accounts filed by the Company with banks or financial institution and reconciliation and reasons of material discrepancies, if any;
- Disclosure as to whether or not company is a declared wilful defaulter by any bank or financial Institution or other lender;
- Details of transactions with the Struck off Companies;
- Disclosure as to whether any charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period, details and reasons thereof;
- Compliance with number of layers of companies under the provisions of the Companies Act, 2013;
- Compliance with approved Scheme(s) of Arrangements under the provisions of the Companies Act, 2013;
- Utilisation of Borrowed funds and share premium by the Company;
- The details of any transaction not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961;
- Details of Corporate Social Responsibility (CSR);
- Disclosure relating to trading or investment made by the Company in Crypto Currency or Virtual Currency, etc.
The above said amendments would come into force with effect from the 1st day of April, 2021.
The complete text of the notification may be viewed at below link:MBG Corporate Services